How cuts can heal a divided Britain

The full extent of the challenge facing the fledgling Coalition was spelt out yesterday, when the think tank Policy Exchange published an 18-month investigation into the difference between work in the public and private sectors.

They found no mere gap between Britain's two working nations, not even just a divide, but a massive chasm which splits our country down the middle.

If you are employed by the state, your daily hours of toil will be so much shorter than your private sector counterparts that you will spend nine years - yes, nine years - less time at work over a lifetime. Yet as a state employee, you will be paid 30 per cent more an hour than your private sector counterpart and your pension will be much more generous, too. You will also be joining the 7million Britons whose salaries must now be met by the taxpayer, a number that grew FIVE times faster than jobs in the private sector under Labour.

These are devastating figures, revealing a situation that is simply economically unsustainable, because a shrinking private sector will be unable to create the wealth to support such a bloated state.

The deep programme of cuts - and the ones made yesterday show how painful they will be - are not just an unpleasant necessity to reduce our debts.

They represent a once-in-a-lifetime opportunity to rebalance the economy. Our future as a competitive nation is at stake if we duck the challenge.

Keep it in the family

When David Cameron is asked what issues define him as a person, he is sure to mention his commitment to the family and marriage.

So it is disappointing that he appears to have delegated responsibility for his family agenda not to Iain Duncan Smith, whose special interest it is, but to Nick Clegg, the Deputy Prime Minister, whose priorities are very different. Yesterday, the centrepiece of Mr Clegg's speech on the subject was flexible working for fathers, a trendy proposal for which thousands of small businesses would end up paying a terrible price.

Indeed only politicians from hugely privileged backgrounds advised by civil servants with flexi-hours and numerous working-at-home days could possess such a poor grasp of how real firms work.

Nor does Mr Clegg back the Coalition's pledge to support marriage through the tax system - indeed who can forget the sneering derision with which he and his wife first greeted Mr Cameron's plan?

Given how central family policy is to the Prime Minister's own agenda, it's surely a mistake to hand it over to the Deputy Prime Minister. Even if they do need to find him something to do.

Time for realism

In opposition, George Osborne and Vince Cable both argued that high street banks, which no government can allow to fail, should not engage in the casino capitalism that led to the credit crunch.

Now Mr Osborne has set up a Commission, to report in a year, into the case for splitting up those giant banking groups that attempt to do both.

There are powerful advocates who agree, including the Governor of the Bank of England and Paul Volcker, former head of the U.S. central bank, whose more limited plan to restrict retail banks from taking big speculative bets is being pushed by President Obama. The Mail has much sympathy with their position.

But Mr Osborne's Commission, which some say has been chosen to back a break-up of the banks, must be realistic.

Without an international agreement, a unilateral decision to dismember British banking giants might drive the likes of Barclays and HSBC offshore.